Saturday,… Saturday?! If you wanted me to read something, why did you print it on Saturday, Chronicle? Make Saturday happen during the week and maybe I’ll read it. But,…
…oh, is this thing on?
Ahem. So, as I am enjoying my Slothness and not chasing some job possibilities because I have one waiting to start. Earthlink is being all jittery like a first date. They won’t sign the papers with CenterPoint, because their requirements clock doesn’t start until they sign.
I thought they made a bad business decision when they got into this, but that’s their problem. (This technology is moving faster than the install rate.) Unfortunately, their new CEO is wary of blind, high risk growth. Maybe it’s time to look for a different job!
I think they’re going to try to renegotiate, which is only going to cost lots of time.
Earthlink’s Wi-Fi delays put project in question
By ALEXIS GRANT and MATT STILES
Copyright 2007 Houston Chronicle
Aug. 18, 2007, 11:47AM
Months after the City Council approved a contract to allow EarthLink Inc. to blanket Houston with a wireless network, the build-out still has not begun.
The delay is prompting concern that the company, which publicly has said it is rethinking its business model, may be having doubts about whether to proceed in Houston as planned.
Mayor Bill White acknowledged Friday that the company is two or three months behind schedule. But he said EarthLink is obligated under contract to build the network within a certain time, so if there are significant delays Houston would receive compensation.
“I would intend to either wrap something up within a fairly short period of time â€” probably a matter of weeks, not months â€” or proceed with our legal remedies against the company,” White said.
He said he has been working with EarthLink officials to find a mutually beneficial solution.
The company has yet to sign an agreement with CenterPoint Energy to lease its light poles for the project, according to CenterPoint spokeswoman Leticia Lowe. City officials expected that to happen soon after the council approved the city’s contract in mid-April.
Lowe said CenterPoint sent the contract to EarthLink last month. She declined to speculate about why EarthLink may be holding off on signing the agreement.
“We are waiting to execute on it, but we’re waiting for EarthLink’s signature,” she said.
City to pay $2.5 million
The city contract allows EarthLink to build a wireless network over Houston’s 640 square miles. Residents, city employees and visitors then would be able to access the network for a fee through an Internet service provider.
The city agreed to pay the company $2.5 million during the next five years to serve as the anchor tenant.
But EarthLink officials, who declined to comment for this story, have expressed unease recently about the financial viability of wireless projects, which have yet to prove on a scale as large as Houston’s that they will draw enough customers to make a profit.
The project here is expected to require an investment of about $50 million, according to EarthLink and city officials.
EarthLink officials have not publicly discussed Houston’s network in particular in recent months. New CEO Rolla Huff said in late July the company is reviewing its business model and will not accept new projects until officials are confident they will get their money’s worth.
“The Wi-Fi business that’s currently constituted will not provide an acceptable return. We’re actively exploring ways to scale this business more economically,” Huff said during a conference call with analysts. “You can expect that we’ll scale back both new-build capital as well as ongoing operating expense structure.”
Because Houston’s network would be the largest in North America, some municipalities and industry experts are looking to the city â€” and EarthLink â€” as an indicator of what lies ahead for Wi-Fi.
Glenn Fleishman, editor of Wi-Fi Net News, who follows municipal wireless projects around the country, predicted the company may try to negotiate a new agreement, one that is less risky financially.
“I think the deal goes south,” Fleishman said. “I expect that they (EarthLink) are going to try to go back to the well.”
Under its contract with the city, EarthLink must build at least half of the network within a year of the start date and the rest in the following year. If it defaults, it could owe the city up to $5 million.
Officials’ last estimate for a completion date was mid- to late 2009. But the clock has not started ticking because the contract defines the start date as 30 days after EarthLink signs the CenterPoint agreement.
The municipal wireless industry is facing obstacles throughout the country. While hundreds of municipalities are building or planning to build networks, some of the larger projects are encountering delays, wireless signals that are not as reliable as expected and a lack of customers.
“All of the numbers are pointing toward the consumer being a weak part of the financial foundation,” said Craig Settles, a municipal Wi-Fi consultant. Profit is more likely to come from businesses that buy services or the city’s commitment to being an anchor tenant.
‘A bump in the road’
EarthLink recently completed a network in Corpus Christi, much of which was built by the city and then sold to the company.
In Philadelphia, EarthLink is in the midst of building a 135-square-mile network. That project is on schedule and should be completed by the end of this year, said Greg Goldman, CEO of Wireless Philadelphia, the nonprofit group that has partnered with EarthLink.
Umesh Verma, chairman of the Greater Houston Partnership’s technology infrastructure committee that helped White develop a vision for the network, said delays do not bode well but may be necessary to proceed properly.
“Delays are costly, and it means that what you’re going to get is maybe different than what you started out with,” Verma said. But, he added, he thinks this delay is just “a bump in the road.”